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Workers’ Compensation Rx Spend Down, Survey Shows

Gerry Dumke
Posted on: November 16, 2016 by Gerry Dumke

A new survey by CompPharma that looks at prescription drug management shows an 8.7% reduction in Workers’ Compensation payers’ pharmacy spend. The 13th annual survey analyzed 2015 pharmacy cost data of 30 Workers’ Compensation insurance carriers, third-party administrators, self-insured employers, and state funds. Interviews were conducted in the summer of 2016, with data on pharmacy spend and other metrics derived from respondents’ 2015 results.

Prescription drugs are a key factor in Workers’ Compensation spending. In fact, accounting for one of every six medical dollars, pharmacy’s impact on disability duration, return to work and claim settlement outweighs the benefit’s dollar expense. Because of the significant expense prescription drugs represent in Workers’ Compensation, the industry, including the National Council on Compensation Insurance (NCCI), the Workers’ Compensation Research Institute (WCRI), the California Workers’ Compensation Institute (CWCI), and others are intent on continually researching this area to see where improvements can be made to lower Rx costs.

The decrease of 8.7%, according to CompPharma, resumed what had been a four-year trend of flat or declining spend. (That trend was interrupted in 2014 with a 6.4% increase over 2013’s results.) Considering the total change in spend, the 8.7% decrease, says CompPharma, “marks a resumption in the long-running trend of declining inflation rates, and more recently, declining cost itself as inflation turned negative.”

The reduction in Rx spending for 2015 can be attributed to several factors. According to the CompPharma survey, Workers’ Compensation payers credited tighter clinical management, better integration with their pharmacy benefit managers, and prescribe interventions for the decrease. All have opioid management programs to limit the number of initial opioid prescriptions and/or decrease morphine equivalents across as many claims as medically appropriate. (We wrote about opioid usage and the workplace in June and the toll it’s taking on employees and the measures employers can take to help reduce the risks of these addictive drugs.)

Opioids, however, continue to remain the number-one payer concern. Workers’ Compensation payers spent $1.54 billion on opioids in 2015, which was 13% of total U.S. opioid spend.

With a handful of exceptions, decreases in Rx spend were not attributed to a drop in claim count; only four of the 30 respondents (13%) in the survey tied their lower drug costs to smaller initial claim count, although several did note that a decrease in older claims was a significant contributor. In contrast, 12 respondents (40%) credited clinical programs as the primary reason costs declined. Other factors noted were:

  • Reduced utilization (fewer scripts per patient)
  • Pricing decreases
  • Assertive claim closure and settlement programs specifically addressing older claims
  • Aggressive efforts to address opioids, other Scheduled drugs, and compounds
  • Shifting drug authorization from adjusters to clinically trained staff
  • Changes in claim mix

About Caitlin Morgan

Caitlin Morgan specializes in providing a wide range of Workers’ Compensation insurance solutions – from guaranteed cost plans to self-funded programs. We can assist you and your clients with gaining control over the cost factors that drive Workers’ Comp spend, including implementing strong risk management and loss control strategies and Return to Work programs. For more information about our Workers’ Compensation insurance solutions, give us a call at 877.226.1027.

 

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Posted in: Workers Comp Workers Compensation